Helpful correction looks healthy, 26,100 key support; Bank Nifty Likely to Outperform: Vinay Rajani

Indian equity benchmarks witnessed mild selling pressure after hitting record highs earlier this week, but the broader trend remains constructive, said Vinay Rajani, AVP and Senior Technical & Derivative Analyst at HDFC Securities.Speaking to ET Now, Rajani said the Nifty’s recent decline is an ‘ongoing correction’ rather than a trend reversal. Despite falling over 200 points from its lifetime high, the Nifty continues to trade above its 20-day, 50-day and 100-day moving averages, indicating that the positional uptrend is still intact.

Important useful levels to look at

Rajani highlighted 26,100 as a crucial support level for the Nifty. “As long as the index remains above 26,100 on a closing basis, the bullish structure remains valid,” he said, adding that this level should act as a stop-loss for traders taking long positions.

On the upside, the recent peak of 26,373 remains immediate resistance. A sustained move above this level could open the door for a new all-time high, with 26,700 becoming the next major resistance zone.

He also pointed out that while the overall index is consolidating, several large-cap stocks continue to set new 52-week and all-time highs, indicating selective strength within the market.

Bank Nifty shows relative strength

Unlike the broader market, Bank Nifty is performing excellently and remains technically strong. Rajani noted that banking stocks such as ICICI Bank, Axis Bank and Kotak Mahindra Bank are in a clear uptrend, which supports the relative strength of the index.

“Bank Nifty is likely to continue to outperform. Traders should hold long positions with a trailing stop-loss at 59,600,” he said. On the upside, 60,450 – the previous session high – is a key resistance, a breakout above which could signal further uptrend.

Trent weak in the short term; Confidence more resilient

Commenting on stock-specific moves, Rajani warned traders against Trent following the sharp decline following the Q3 updates. The stock fell nearly 8% on heavy volume, forming lower highs and lower lows on the weekly charts.

“Technically, Trent looks weak in the short term. Traders should avoid taking a falling knife,” he said, adding that while the stock may be attractive from a long-term investment perspective, short-term momentum remains negative.

In comparison, Reliance Industries seems better placed technically. Despite recent declines, the stock continues to trade above its 100- and 200-day moving averages, keeping the primary trend positive. “Reliance is likely to find support at lower levels and try to recover, making it relatively stronger than Trent on the positional charts,” Rajani said.

Market Outlook

Overall, Rajani remains positive on Indian equities and advises investors and traders to stay aligned with the prevailing trend. “Momentum is lacking at the index level, but sectoral and stock-specific opportunities remain. A catch-up rally in the Nifty cannot be ruled out if global cues remain supportive,” he concluded.